UECC's Bjorn Svenningsen on LNG-Fueled Car Carriers

An interview with Maritime Executive

Bonn, Germany - 19.06.2017

At Nor-Shipping 2017, MarEx sat down with Bjorn O. Gran Svenningsen, the Head of Sales and Marketing at United European Car Carriers (UECC), to talk about the future of LNG bunkering. UECC is Europe's leading short-sea

Bjorn: We are a market leader, and we believe that with leadership comes responsibility. Building environmentally-friendly ships is one way that we can fulfill that part of our mission. We are also replacing aging vessels, and our new ships must comply with the requirements of the European Emissions Control Area. LNG bunkering meets these requirements, but it was very important to us that these ships were also dual fuel, because we need the flexibility to be able to operate them elsewhere.

It was also important to ensure a supply of LNG for these vessels, so we entered into an agreement with French energy company Engie to provide us with bunkers. That agreement was in place before we signed the contract to build the ships.

MarEx: What are your arrangements for bunkering?

Bjorn: We will need to have a supply every week, because we have two vessels on a 14-day loop in between Southampton, Zeebrugge, Bremerhaven, Malmö and St. Petersburg, with a biweekly stop in Gydnia. To meet this need, Engie, Fluxys, Mitsubishi Corporation and NYK partnered to build a 5,000 cubic meter LNG bunkering vessel called the Engie Zeebrugge. They foresee a growing market need for LNG bunkering in the region, and this new vessel will be able to supply fuel to ships in Zeebrugge, Antwerp and other nearby ports.

MarEx: Beyond LNG, what will these new ro/ros do for your operations?

Bjorn: These vessels are ice class 1A Super, for ice up to one meter thick, so we can take them into St. Petersburg in the winter. They are also very flexible, with three decks that can accommodate oversize / project cargo up to 5.7 meters tall, 15 meters wide and 160 tonnes in weight.

We have ambitions that the breakbulk business segment will grow for us – and not just high and heavy project cargo, but breakbulk cargo in general. If you can load it on one of our flatbeds, we can carry it, from windmill blades to timber and building materials. We can economically deliver much smaller shipments than traditional heavy lift operators because we can easily arrange less-than-load consolidation, and we offer much more predictability because we have a fixed liner network with fixed loading dates.

MarEx: Do your customers support your decision to move towards LNG?

Bjorn: We have a challenge in convincing our customers that they should also take the lead on sustainable shipping. We've made a major investment in these two vessels, and the LNG systems add an additional cost. We expected that we would get an extra return from our customers for this, but at this point, they seem reluctant to pay any premium. They are very price sensitive.

MarEx: How does the competitive environment affect these conversations on price?

Bjorn: Rates are under pressure because the ro/ro market is facing a large oversupply of tonnage. We're seeing a lot of older pure car and truck carriers coming from the Far East into our region. In addition, some existing operators in the Mediterranean and the Black Sea are expanding into Northern Europe.

But I think that the supply problem will change in the future because the orderbook for the coming years is very slim. In 2017 there will be only 18 PCTC vessels delivered worldwide, followed by 13 in 2018, then three in 2019, then just one in 2020. Some of these could be cancelled. This is what is on the books now, and there will always be a two-year time lag between any new orders and any additional deliveries. On the demolition side, it’s hard to predict exactly when the fleet's older tonnage will retire, but the tougher emissions regulations that come into effect in 2020 may prompt owners to scrap vessels that are near the end of their working lives. The same regulations will have an effect on prices: rates will have gone up after 2020 because costs will go up. – MarEx